Procuring furniture and accessories for your clients positions your company to make higher profits.
Understanding how and why manufacturers and distributors structure their pricing tiers the way they do will help you decide where in the structure you want to place your company.
Not all have the same set of structures, but for simplicity, let's assume they all have a set suggested retail price and start there.
MSRP: Manufacturer's Suggested Retail Price; was developed to set a standard price in the market for high dollar items and help the price remain constant across retailers.
MAP: Minimum Advertised Price; is a policy set by manufacturers and distributors that define the minimum price retailers are allowed to advertise through mass media. Retailers are free to sell the products for whatever price they choose.
IMAP: Internet Minimum Adervited Price; is a policy covering internet-based offers only, setting the guidelines for online ads and sales pages. Retailers are not allowed to advertise or post a selling price lower than what the IMAP indicates.
WHOLESALE: to buy wholesale, retailers are required to meet a minimum opening order amount and maintain a yearly purchase amount, which also factors into the pricing tier they're able to buy at.
These pricing structures and policies protect the manufacturer's brand image and product value by hampering pricing wars and help businesses compete fairly.
Generally, furniture manufacturers and distributors offer a "trade-only" or "designer" discount to interior designers and decorators that hold accounts, which allows them to get their clients pieces at online market prices. These discounts vary from vendor to vendor, ranging anywhere from 20% off up to 35% or 40% off the retail price.
The problem, however, for designers and decorators is that these discounts don't allow for much profit, if any, to be made when clients are comparing it to online prices that may include shipping costs.
A "designer" discount brings the purchase price down to the IMAP level, which is the amount online retailers sell the products for, the online market price. Therefore, the online designer can't compete and doesn't make any profit.
Online retailers use affliliate programs as a marketing tool to drive sales, much like hiring a sales representatives for a brick-and-mortar store. Commissions on furniture can be as low as 2%, but average around 4% to 5% of the online retail price.
The problem is, these earnings are extremely small for the time, and efforts designers spend leading their clients down a retailer's sales funnel.
Affiliate commission can be an unstable and inconsistent stream of revenue for online designers and decorators. Clients may forget to use the link, or restrictions may apply that deem commissions unapplicable.
We recognize e-designers have limited opportunities to make a reasonable income from the products you recommend your clients purchase. That is why we provide you with comprehensive concierge-styled services. One of which is our procurement service. That is structured to ensure you make a profit on every piece your clients purchase through your virtual design package.